Tribunal confirms caregiver living with parents was eligible for principal private residence relief

In Mark Campbell v HMRC [2025] UKFTT 00867, the First-tier Tribunal (FTT) allowed the taxpayer’s appeal and confirmed that principal private residence (PPR) relief was available on the disposal of multiple properties as the taxpayer qualified under the job-related accommodation rules whilst residing at his parents’ home in order to care for his father.

Background 

Mark Campbell was living at his parents’ home, under an employment contract to provide care for his father, when he bought and sold four residential properties in quick succession between 2010 and 2016. He did not notify HMRC of any tax liability. 

HMRC became aware of the final disposal in the 2015/16 tax year and requested that Mr Campbell file a tax return. 

In response to this request, Mr Campbell submitted a return claiming PPR relief under section 222, Taxation of Chargeable Gains Act 1992 (TCGA), on the basis he was residing in job-related accommodation and the job-related accommodation exemption in section 222(8), TCGA, applied. 

HMRC opened an enquiry into the return and later issued a closure notice under section 28A, Taxes Management Act 1970 (TMA), rejecting the PPR relief claim. 

HMRC also issued discovery assessments to Mr Campbell, under sections 29, TMA, for the earlier disposals made in the 2012/13 and 2014/15 tax years. 

The closure notice and discovery assessments were issued on the basis that Mr Campbell was either carrying on a trade and liable to income tax on the profits or, alternatively, liable to capital gains tax (CGT) with no entitlement to PPR relief. 

Penalties for deliberate failure to notify were also imposed under Schedule 41, Finance Act 2008. 

Mr Campbell appealed to the FTT.

FTT decision

The appeals were dismissed. 

The FTT found that Mr Campbell’s activities did not amount to trading, so he was not liable to income tax in relation to the property disposals. However, the FTT held that PPR relief was not available, as none of the properties had been Mr Campbell's only or main residence, and his parents’ home did not qualify as job-related accommodation. The FTT also upheld the validity of the discovery assessments and closure notice, and concluded that the penalties that had been issued for failure to notify were appropriate, based on deliberate behaviour.

A copy of the FTT's decision can be viewed here.

Mr Campbell appealed to the Upper Tribunal (UT).

UT decision

The appeals were allowed in part.

Mr Campbell argued that the FTT had erred in law in its treatment of PPR relief, the validity of the discovery assessments, and the finding of deliberate behaviour. 

The UT held that the FTT had wrongly applied the job-related accommodation test, failed to consider Mr Campbell’s intentions at the time of acquiring the properties, and improperly transposed findings across the disposals. These were material errors of law, and the FTT’s decision on PPR relief was set aside. 

The UT also concluded that the FTT had made a material error of law in relation to the penalties, both in finding that Mr Campbell's behaviour was deliberate and in failing to consider whether HMRC’s penalty decisions were correct or should be mitigated. The penalties decision was therefore set aside.

However, the UT upheld the FTT’s conclusion that the discovery assessments were valid. 

The case was remitted to a differently constituted FTT to reconsider the outstanding issues.

A copy of the UT's decision can be viewed here.

Differently constituted FTT decision

The FTT found that Mr Campbell was entitled to full PPR relief on three of the four properties, based on his intention at acquisition to occupy each as his only or main residence. With regard to the fourth property, PPR relief was allowed for 19 out of 27 months of ownership - one month based on intention to occupy, and 18 months under the statutory deemed occupation rule in section 223(2), TCGA. The remaining gain was fully covered by Mr Campbell’s annual exemption, so no CGT was payable. 

Mr Campbell's appeal against HMRC's closure notice, discovery assessments, and penalties was therefore ultimately allowed.

A copy of the FTT's final decision can be viewed here. 

Comment

This case provides some important practical lessons for taxpayers and their advisers in relation to PPR relief claims, particularly, where a taxpayer has multiple properties or unusual living arrangements, such as living with family members due to caregiving responsibilities. 

The UT confirmed that a taxpayer’s intention at the time of acquisition is critical in establishing whether a property was their only or main residence. Taxpayers should ensure they retain contemporaneous evidence, such as correspondence, property searches or personal notes, to support their intentions.

The FTT also clarified the correct application of the job-related accommodation rules. Accommodation must be occupied by reason of employment, not simply due to convenience or family ties. Taxpayers should assess the necessity of the living arrangement and its connection to the taxpayer’s duties, rather than simply relying on general assumptions.

Finally, with regard to penalties, the UT made it clear that findings of deliberate behaviour must be supported by clear and specific reasoning from HMRC. A generic conclusion will not suffice.